Defence and security economics

Economic security is a critical dimension of NATO’s priorities with Allies and global partners. The potential disruption to the flow of economic resources comprising people, goods and strategic commodities can pose challenges and opportunities to the security of the Alliance, as underlined by NATO’s Strategic Concept – the official document that sets out NATO’s enduring purpose, nature and fundamental security tasks.

A proper understanding of defence and security economics is an essential contribution to NATO’s work in pre-conflict, conflict and post-conflict environments. At present, NATO’s efforts are focused on Afghanistan, international economic security, partnerships and supporting the development and sharing of economic intelligence.

Economic cooperation has always been an important aspect of the Alliance. Article 2 of the North Atlantic Treaty, clearly states that member countries “will seek to eliminate conflict in their international economic policies and will encourage economic collaboration between any or all of them.” Economic cooperation between Allies and, over time, with partners began formally in 1957 with the establishment of the Economic Committee. The Committee conducted multi-faceted work on economic security until mid-2010, when it was dissolved and its tasks pursued within other committees. The Defence and Security Economics (DSE) section of the Political Affairs and Security Policy Division of the International Staff constitutes the core team that deals with defence and security economics on a day-to-day basis.

Afghanistan

The primary work of DSE is directed to supporting NATO’s efforts in Afghanistan and to providing assessments on international economic security in a world where the balance of international economic power is changing. In this regard, DSE has developed various important initiatives in support of NATO ISAF and Afghanistan.

Firstly, DSE has significantly contributed to the development of the NATO Afghan First Policy that seeks to reduce the risk of corruption in the contracting for goods and services in support of economic development and security in Afghanistan.

Secondly, DSE, in partnership with international organisations and NGOs, is engaged in building the capacity of the government of Afghanistan to reduce corruption in defence and security establishments in Afghanistan. This includes the application of Building Integrity tools (a NATO initiative first developed in 2007) to support NATO ISAF in developing anti-corruption training for the Afghan National Army and the national Police.

Thirdly, DSE interacts with the International Monetary Fund and the World Bank in assessing those economic and financial issues that are critical to Afghanistan’s medium- and long-term economic development and security.

International economic security

The challenges confronting the Alliance in the wake of the global economic recession in 2008 have been felt in the pressure imposed on national defence budgets at a time of economic and fiscal austerity. In an increasingly complex financial and economic world, international economic collaboration is a fundamental condition for stability and security, together with measures to ensure that NATO members continue to devote the necessary budgetary resources to defence and security capabilities.

DSE organises workshops and interacts with other divisions within the International Staff (the Emerging Security Challenges and the Defence Policy and Planning Divisions) in focusing upon the affordability and sustainability of defence spending within the Alliance set against the backcloth of the changing distribution of international economic power.

Partnerships

In coordination with other entities within the International Staff, DSE contributes to the monitoring and assessment of the economic performance of partners in the framework of their Annual national Plans and Membership Action Plans.

Additionally, discussions with partners can focus on assessing developments in economic security, as well as supporting their efforts to manage the socio-economic consequences of defence sector restructuring and downsizing (in support of vital defence reform and defence conversion) and to promote better management of scarce defence and security sector financial resources.

Economic Intelligence

DSE retains access to a network of defence economic experts from Allied capitals who previously contributed to the analytical work of the Economic Committee. With the reform of NATO intelligence structures and processes, DSE remains able to support this work with contributions on economic intelligence.

The Defence and Security Economics (DSE) section of the Political Affairs and Security Policy Division in the NATO International deals with defence and security economics.

DSE was reorganised in 2010 after the dissolution of the NATO Economic Committee and provides expert advice and inputs to the Political and Partnerships Committee and the Operations Policy Committee. It also contributes to the work conducted by other divisions in support of NATO’s operations and partnerships.

The Head of DSE is also NATO’s Senior Defence Economist and is responsible for internal liaison with NATO committees, agencies and other bodies. He is also responsible for external liaison with pivotal international economic organisations such as the International Monetary Fund, the World Bank, the Organisation for Economic Cooperation and Development, the European Bank for Reconstruction and Development and other major international economic organisations. DSE also maintains an extensive network of contacts with experts on defence and security economics in prominent international think tanks.